Rapid expansion of OYO

OYO, a fast-growing Indian hotel chain backed by Softbank, is investing  £1.6bn ($2bn) to triple 25-year-old Ritesh Agrawal, the founder’s stake to 30 percent from 10 per cent  in the  company  while light speed and Sequoia, its US backers partly cash out.

The share buyback pushes OYO , the World’s third-largest hotel chain behind InterContinental Hotels Group, close to a  £8bn ($10bn) valuation.

Shareholders and regulators still need to approve the deal.

Sequoia and Lightspeed will each receive £400m  ($500m) as part of the deal and retain a small stake in the company.

Mohit Bhatnagar, Managing Director of  Sequoia in India said both Sequoia and Lightspeed  said  they remained committed to OYO as “ This is the kind of stuff start-ups and ventures-investing dreams are made of”.

This move will help Agrawal to consolidate his control over the fast-growing business and pushes ahead with an ambitious bid towards becoming the World’s largest hotel chain. OYO is expanding aggressively in the US and Europe, announced this month that it is widening its business moels to include office spaces, buying Innov8,  for $30m.

 OYO has expanded rapidly with  a presence in 80 countries and roughly half of its 1m rooms are in China , where it launched two  years ago, and has 50 hotels in US where they invested recently $300m.

Softbank’s Vision Funds last year led a $1bn funding round into OYO and Airbnb.

The company’s mantra  hinges on converting existing hotels into franchisees and promoting them through an online booking platform.  Softbank founder Masayoshi Son last year called OYO’s business  “ a next generation type of hotel management”.

Jayanth Kolla, founder of technology consultancy Convergence Catalyst said its scale had helped to provide OYO with a competitive edge  which made way of speedy international expansion.